Here is another update regarding Social Security. PFFI President RonDavies, PFFI Attorney Alan Herzfeld and I met with State ControllerDirector Brandon Woolf, State Social Security Manager Rita Foltman andSpecial Deputy to the Attorney General Dave High on Tuesday, November29th.

We were informed that the Controller’s office has identified 171employers in the State that could have employees that fall under thedefinition of Firefighter as contained in the State code. They havemailed surveys to all of these employers to confirm eligibility andhave only received about 2/3 of them back so far. One of the verylarge hurdles they are facing is investigating consolidations,mergers, dissolutions and contracts for services that have taken placein these jurisdictions over the past 30 years and making sure alleligible employees are part of the voting process. Another factor thatthey are looking at for eligibility is that the date of 10/1/1980 iswhen SS taxes began to be withheld from most FF’s in the State. Onceall eligible voters are identified, The Controller’s office will beginto send out letters to all jurisdictions notifying them whether theyare eligible or not. At this point, the Controller’s office hasidentified approximately 733 eligible voters. I have a ballpark numberof 892 based on all of the FRF Departments in the State. We arehopeful that their number will fall more in line with ours as themissing surveys are returned.

As far as timelines and the vote process go, they must give a 90 daynotice to all eligible voters of when a referendum vote shall be held.If any eligible voters are deployed military personnel, there must bean additional 60 days added to notice of the vote. The Controller’soffice informed us that they have identified 3 deployments in theState and have confirmed that all three of them have returned. BrotherGardner subsequently has been deployed as of this morning. So itappears at this time that the notice timeline will be 150 days. TheController’s office is still moving forward with a statewidereferendum vote. We gave them factual information to consider to holda “deemed” vote. (This would be an entity by entity vote for eachjurisdiction) Information we provided them was that there are 22 FRFDepartments in the State and that 11 of them hold less than 3% of thevoting population in each location and actually 7 of those 11 holdless than 1.5% of the vote based on our numbers for eligible voters.This becomes problematic as smaller departments may not and have notbeen given the opportunity to negotiate the ongoing 6.2% employer’sportion and the 3 years, 3 months & 14 days of the back pay due to theemployer as well. We also offered to assist with the financial burdenthat could come from holding the vote by assisting with ballotprinting, envelope printing as well as postage to send ballots to alleligible voters. They assured us that they will take all of theinformation under advisement and get back to us if that option wouldbe considered.

We were also notified that addresses for all voting members will befrom the database at the PERSI office. Please be sure to contact PERSIor sign on to your account to confirm your current address is onrecord there or you may not receive a ballot during the voting period.We also need to make certain that the proper forms are filed in timelyfashion to be eligible for the back pay if a vote would result ingetting out of SS. Also if back pay is granted, the Employer’s portionis taxable upon receipt. Another critical part is that any ballots notreturned will be counted as a vote to be out of SS, in other words, ifyour ballot is lost in the mail, your vote will be to get out of SSeven if that was not your selection.

Once the Voting period is determined, there will be education providedfrom different entities explaining the vote, and ramifications of ayes or no outcome. They will attempt to hold these educationalopportunities around the State, and we are hopeful that there will bemultiple days offered to fall in line with our shift work schedulesand the ability for all to attend. There is likely to be a class heldin the Coeur D’ Alene area, one in the Boise area and one in the East,either Idaho Falls or Pocatello. Education should include effects ofthe Windfall Elimination Provision (WEP) & the Government PensionOffset (GPO) provision within Social Security, the loss of disabilitycoverage if removed from SS, The effects on your PERSI retirementelections involving SS as well as the removal of credits in the eventof a vote to be out of SS.

Please be thinking of questions you would like to have answered and ifyou could, forward them to me so that we can get a head start ingetting factual answers when these educational forums are held.

For many of you receiving this email, it may be our first opportunity to communicate directly about the majority vote retirement system referendum for certain firefighters. State Controller Donna Jones, who also serves as the State Social Security Administrator (Administrator), and her staff continue to devote significant resources to the research of and correction to Social Security coverage for certain Idaho firefighters. This email – albeit lengthy – will outline the progress made, future actions required to comply with federal and state law, and a brief summary of important information.

History

The history of the events leading to this referendum is available in the "Idaho Firefighter Referendum" section of our new SSA 218 Agreement Web site: http://www.sco.idaho.gov. The site also includes many links to federal and state laws that are applied to correctly determine social security coverage for state and local governments. Please visit the site often to view new information. We will post updates as they are available.

Once it was established that a referendum is required for certain firefighters, our office consulted with the Public Employee Retirement System of Idaho (PERSI) and then joined with Governor Otter and legislative leadership to write and propose legislation allowing the Administrator and her designees access to PERSI retirement records. Access is required to correctly identify the eligible voters (not all firefighters will be eligible to vote). Governor Otter signed the legislation on April 11, 2011. Shortly thereafter, our office began the critical review of employer records to identify those which have firefighter positions that are potentially eligible to vote.

We compared our 218 coverage agreements with the PERSI records and found that not all of the information needed for social security coverage purposes is captured for PERSI purposes. We also found that many of the employer names are not the same. As firefighter entities were created, dissolved, merged, consolidated or had a name change, it appears that our offices were not always notified and, therefore, the identification process has been more complicated and required more time than anticipated.

Future

The steps leading to the vote are:

Complete employer identification

To complete the process, we will need additional information from you, the firefighter employer. Under the authority vested in the State Controller, our office will email a questionnaire to you in the near future asking for the final pieces of employer identification information. Your accurate and verifiable answers will be key to determining eligibility. Participation is required and all replies will be confidential and used for Section 218 purposes only. Please return only one questionnaire per employer.

If you, as fire chief, are not the contact person for referendum correspondence, please reply to this email by September 14, 2011 notifying our office who the contact should be. To avoid confusion, we are asking for one contact per firefighter employer who will then be responsible for forwarding referendum information as needed.

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It is important to note that this is a questionnaire to continue the eligibility review. The receipt of or reply to this survey does not represent or imply that your firefighter employees are eligible or not eligible to vote in this referendum.

Identify and notify eligible voters

After identifying the employers that have eligible positions, we will contact you again asking for a list of the employees meeting the eligibility criteria. This list will then be verified with the PERSI membership list. This process will result in the identification of eligible voters and the official polling register.

It appears that cities and counties that once included firefighter positions have created a separate legal entity (such as a fire protection district) which now includes the firefighter positions. In some cases, our office was not notified. Our records may not have been updated to show the structural change. If you receive this email and are no longer the employer for the firefighter positions, please forward this email to the correct employer and include IDSSA218@sco.idaho.gov in the email.

All eligible voters will be contacted directly by the State Controller’s Office. The employer will also receive one list of all its eligible voters. It is important that the list submitted for verification contain all current information and agree with the member’s PERSI record. PERSI address changes can be made by the employer electronically through the Transmittal Report of Employee Deductions or the employee may submit PERSI form RS110

Issue legal Notice of Referendum (minimum 90-day notice)

Federal law requires a minimum 90-day Notice of Referendum (Notice). One Notice will be distributed via email to the employment location for eligible firefighters. It will be the employer’s legal responsibility to post the Notice in a conspicuous location at the place of employment and, without delay, inform the eligible voters the Notice has been received and posted.

If it is discovered during the eligibility identification process that an employee who is eligible to vote is on a military deployment or other qualified absence, the federal law allows for an additional 60 days for the Notice of Referendum resulting in a minimum of 150 days from the date the Notice is given until the date of the vote.

Schedule educational meetings

Federal law does not require educational meetings as part of the referendum. Controller Jones recognizes the importance of this vote and that every eligible voter should have the opportunity to openly discuss the effect of a yes or no vote. Along with the Notice of Referendum, we will have a schedule of meetings in key voter population locations throughout the state. Representatives from the Social Security Administration (SSA), Internal Revenue Service (IRS), PERSI, and the State Controller’s Office will be available to explain the effect of the vote and the voting process or to answer questions.

Mail ballot to eligible voters (ballots will also be returned by mail)

The vote is by secret ballot. Approximately 21 calendar days prior to the date of the vote, eligible voters will receive voting instructions, official ballot, secrecy envelope, and return

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affidavit envelope directly from the State Controller’s Office. Each voter will return the ballot by mail. All valid ballots received in the State Controller’s Office by 5:00 PM Mountain Time on the date of the vote will be counted. The voting process will be discussed during the educational meetings and detailed in the instructions accompanying the ballot.

If a majority of the eligible members of the retirement system (not a majority of those voting, unless all those voting are actually all of the eligible members of the retirement system) vote

o

Yes

in favor of coverage, the State will submit a modification to its agreement to extend coverage to the specific retirement system group. The status quo is maintained.

o

No

If Social Security coverage stops as a result of this referendum, to complete the refund of taxes and removal of associated credits, the employer will be required to submit IRS Form 941X for each quarter affected and SSA Form W2C for each employee and for each year affected. The person responsible for payroll and Social Security reporting for the eligible voter may also want to attend the educational meetings.

A Counting Board will canvass the votes after the close of business and certify the results. The results will be posted on the Idaho SSA 218 Agreement Web site.

to continuing to participate in Social Security, the tax will no longer be withheld for the Old Age Survivors Disability Insurance (OASDI) portion of Social Security, the OASDI taxes paid during the open tax years will be available for refund according to IRS policy and procedures and all associated Social Security credits will be removed according to SSA policy and procedures. IRS and SSA will provide additional information regarding the refund and removal processes during the educational meetings.

The retirement system coverage group is not a permanent grouping. It exists only for referendum and coverage purposes and is not a separate group for reporting purposes. Once coverage has been obtained, the retirement system coverage group becomes for reporting purposes part of one of the absolute coverage groups described in 20 CFR, Chapter III, §404.1205(b)

The coverage group for this referendum includes positions under a retirement system prior to PERSI membership date (primarily affecting positions covered by the Firefighters Retirement Fund).

Definition of retirement system for Section 218 purposes

For Section 218 purposes, a retirement system is a pension, annuity, retirement or similar fund or system established by a State or political subdivision. The plan is considered established by the entity if there is any payment of public funds toward the cost of the plan or the plan is 4

established under the entity's authority. The system need not have been created by the legislature of the State or the political subdivision, nor does it have to be a plan under which the benefits are guaranteed by State constitution. A retirement system can include a group annuity policy purchased by a State or political subdivision from a private insurance company to provide retirement benefits for its employees. A retirement system is established if State law requires retirement system protection for employees on a mandatory basis. (This is true whether or not the employing entity has actually implemented the law.)

Reference: SSA - POMS: SL 30001.320 - Section 218(d) - 05/01/2006

Not all firefighters will be eligible to vote

Reference: SSA - POMS: SL 30001.320 - Section 218(d) - 05/01/2006

Federal law defines eligible and non-eligible as:

To be eligible to vote in a referendum an employee must be:

. The 1954 Amendments to the Social Security Act authorized the coverage of employees in positions under a retirement system and prescribed the mechanics for accomplishing this coverage. The amendments required that the employees occupying positions under a retirement system be given an opportunity to vote to determine whether their services should be covered. This vote was not held for certain firefighters covered by a Social Security Replacement Plan prior to withholding Social Security beginning October 1, 1980.

o

a member of the retirement system (PERSI) at the time the referendum is held, and

o

in a position under the retirement system (PERSI), i.e., be in an employment relationship (as distinguished from actually performing services) both at the time the notice of the referendum is given and at the time the referendum is held.

o

Generally, an employee is a member of a retirement system if the employee’s personal relationship to the system qualifies the employee for benefits under the system or for additional benefits if the employee is already qualified. An employee does not lose eligibility to vote when absent from work because of illness, summer vacation or leave of absence (e.g., teachers on summer vacation, members of the National Guard or reservists of the U.S. military and naval services who are called up for active duty) if the employment relationship continues.

Employees who are not eligible to vote are those:

o

who are already covered under the agreement, e.g., a member of an absolute coverage group whose position is now being brought under a retirement system;

o

who are not members of the retirement system (PERSI);

o

who are excluded from coverage by the mandatory or optional exclusions;

o

who are members of the retirement system but are not State or local government employees, e.g., cooperative extension agents of the Department of Agriculture, are not eligible for coverage under an agreement; and

o

who are hired after the date the 90/150-day notice is given and before the date the referendum is held.

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All States are authorized under Section 218(d)(3) of the Act to conduct majority vote referenda for coverage. If a majority of the eligible members of the retirement system (not a majority of those voting, unless all those voting are actually all of the eligible members of the retirement system) vote in favor of coverage, the State will submit a modification to its agreement to extend coverage to that group.

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Federal law prescribes the referendum conditions

While the referendum itself is a State matter, Federal law requires certain minimum conditions be met. It requires the Governor or an official designated by him/her to certify these conditions have been met. (The Governor's delegation of his/her certification responsibility may be general or specific, continuing or limited.) The Governor (or designate) must certify the:

o

vote was held by secret written ballot; (Federal law does not prescribe the ballot format or the voting mechanics.)

o

opportunity to vote was given and limited to the eligible employees

o

employees were given not less than 90 days notice of the vote (Federal law does not prescribe the form of notice.)

o

vote was supervised by the Governor or by a named designate of the Governor

o

a majority of the eligible employees of the retirement system voted for coverage.

Reference: SSA - POMS: SL 30001.323 - Section 218(d)(4) - 12/09/2005

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Mandatory Medicare Coverage

The employee was performing regular and substantial services for remuneration for the state or political subdivision employer before April 1, 1986;

The employee was a bona fide employee of that employer on March 31, 1986;

The employment relationship with that employer was not entered into for purposes of avoiding the Medicare tax;

The employment relationship with that employer has been continuous since March 31, 1986.

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All members of the coverage group will continue to pay the Medicare portion of the Social Security tax regardless of the majority vote unless he or she meets all of the following requirements:

State and local government employees hired (or rehired) after March 31, 1986, are subject to mandatory Medicare coverage. Public employees covered for Social Security under a Section 218 Agreement are already covered for Medicare.

Services performed after March 31, 1986, by an employee who was hired by a State or political subdivision employer before April 1, 1986, are exempt from mandatory Medicare coverage if the employee is a member of a public retirement system and meets all of the following requirements:

Referendum costs will be borne by the State Controller’s Office

Social Security law is complex. We are providing this detail to clarify the steps needed to conduct a lawful referendum. Our Web site has more information and a link to our email (IDSSA218@sco.idaho.gov). We welcome your visits, comments, and questions.

Thank you.

Rita Foltman

State Social Security Manager

Office of the State Controller

PO Box 83720

Boise ID 83720-0011

The State Controllers Office will bear the cost of the official federal and state requirements to conduct the majority vote retirement system referendum and the educational meeting site room expense. Ballots will be cast by mail using a postage-paid and pre-addressed affidavit envelope.

Costs incurred by an employer or employee for optional events or travel costs to and from meetings will be at the employer and/or employee’s expense.

There are several concerns/facts that need to be researched to understand what is best for each individual. These are all that I have come up with.

If you decide to vote out of Social Security you will receive 6.2% of your wages for the last 3 years 3 months and 14 days in back pay. This money has already been taxed, so the government can’t tax it again. The city or district you work for that has paid the other 6.2% will receive that money in back pay upon request from the city/district. If in your contract or an MOU you get all or a portion of that money it would need to be tax sheltered or that money would be taxed as income. Most of you already know about the case law involving the employer’s portion being deemed to go to the employee, but maybe worth mentioning. Medicare is discussed later in this document.

Windfall elimination provision

To understand WEP you must first understand how to calculate your benefit. SS uses something called the AIME formula to calculate your benefit. SS takes your highest 35 years of earnings and puts them into this formula, and it spits out a number which is your base or AIME number they then put this number into the second formula. If you don’t pay into SS you get zero’s which affect that number. Let’s say your AIME formula number is $2500.

90% of first $680$612

32% of the next $3420$582

15% of the remainder$0

Total $1194

In the WEP formula it looks like this.

40% of first $680 $272

32% of the next $3420$580

15% of remainder$0

Total $854

Your maximum reduction in any circumstance will be $340 due to WEP.

If you have had over 30 years of substantial earnings WEP does not apply. If you have 21-29 years of substantial earnings you are in a modified WEP listed below. That number would replace the 40% listed above.

Years of substantial earnings Percentage

30 or more90 percent

29 85 percent

28 80 percent

27 75 percent

2670 percent

2565 percent

2460 percent

2355 percent

22 50 percent

21 45 percent

20 or less 40 percent

If you get a relatively low pension, you are protected. The reduction in your Social Security benefit cannot be more than one-half of that part of your pension based on your earnings after 1956 from which Social Security taxes were not deducted.

Government Pension Offset/Dual entitlement

Non GPO

Generally, Social Security benefits are payable to the spouses of retired,

disabled, or deceased workers covered by Social Security. Spousal benefits are

intended for individuals who are financially dependent on spouses who work in

Social Security-covered positions. Individuals who qualify for both a Social Security

worker benefit (retirement or disability) based on their own work history and a Social

Security spousal benefit based on their spouse’s work history are “dually-entitled”

and are subject to the dual-entitlement rule. The Social Security dual-entitlement rule

requires that 100% of a Social Security retirement or disability benefit earned as a

worker (based on one’s own Social Security-covered earnings) be subtracted from

any Social Security spousal benefit one is eligible to receive (based on their spouse’s

Social Security-covered earnings), and only the difference, if any, is paid as a spousal

benefit.

Regular Dual-Entitlement Formula

JohnMary

Social Security retirement benefit (based on worker’s earnings

record)$900.00$400.00

Maximum Social Security spousal benefit eligible to receive (based

on spouse’s earnings record), equal to 50% of the spouse’s Social

Security retirement benefit$200.00$450.00

Reduction in spousal benefit due to dual-entitlement rule (equal to

worker’s own retirement benefit)$900.00$400.00

Actual Social Security SPOUSAL benefit paid (subtract worker

benefit from spousal benefit)$0.00$50.00

GPO

Individuals who qualify for both a government pension based on non-Social

Security-covered employment and a Social Security spousal benefit are subject to the

Government Pension Offset (GPO) provision. The GPO provision reduces Social

Security benefits that a person receives as a spouse if he or she also has a federal,

state or local government pension based on work that was not covered by Social

Security. The GPO reduction in Social Security spousal benefits is equal to two thirds

The definition of disability under Social Security is different than other programs. Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability.

"Disability" under Social Security is based on your inability to work. We consider you disabled under Social Security rules if:

You cannot do work that you did before;

We decide that you cannot adjust to other work because of your medical condition(s); and

Your disability has lasted or is expected to last for at least one year or to result in death.

The number of work credits needed for disability benefits depends on your age when you become disabled. Generally you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits. 40 credits = 10 years of substantial income. You can earn up to 4 credits a year.

Amount of earnings needed to earn one quarter of coverage

Year

Earnings

1978

$250

1979

260

1980

290

1981

310

1982

340

1983

370

1984

390

1985

410

1986

440

1987

460

1988

470

1989

500

1990

520

1991

540

1992

570

Year

Earnings

1993

$590

1994

620

1995

630

1996

640

1997

670

1998

700

1999

740

2000

780

2001

830

2002

870

2003

890

2004

900

2005

920

2006

970

2007

1,000

Year

Earnings

2008

$1,050

2009

1,090

2010

1,120

Survivor benefits

Dependant benefits are not changed by WEP or GPO. They would be affected by how much you put into SS. As you work and pay Social Security taxes, you earn credits toward your Social Security benefits. The number of years you need to work for your family to be eligible for Social Security survivors benefits depends on your age when you die. The younger you are, the fewer years you need to work. But no one needs more than 10 years of work to be eligible for any Social Security benefit. There is a one-time payment of $255 that can be made when you die if you have worked long enough. This payment can be made only to your spouse or child if they meet certain requirements. For more specific information see this site on SS http://www.socialsecurity.gov/survivorplan/onyourown5.htm

Medicare

Medicare is not affected if you were hired at your department after April 1st 1986. However, if you were hired before that date You will be forced out of Medicare with social security. As long as you have paid into SS/Medicare for 10 years/40 quarters of substantial income you will not lose the Medicare benefit and you will receive back pay on the 1.45% paid for the previous 3 years 3 months and 14 days.

Persi

Your PERSI retirement is not affected by your decision to stay in or vote out of SS.

Retirees

The Social Security office stated that if you are retired and collecting benefits those individuals are not affected.

Brother Holbrook found this and though it might be some useful reference material for the peeps concerning their decisions on what to do with the social security if we ever get it.Download: Financial Data.JPG

I received your voice message when I returned from meetings and thought it might be helpful to convey the referendum status through email.

We are beginning the process to conduct a statewide referendum. The statewide referendum will be conducted to ratify social security coverage for firefighter positions in order to comply with Idaho Statute 59-1398.Idaho is an absolute coverage state meaning, according to the Social Security Administration, all of the employees who are members of the coverage group are covered by social security unless they are mandatorily or optionally excluded from coverage under the State's agreement. A successful majority vote referendum will result in irrevocable social security coverage for all eligible firefighters.

We are in the preliminary stages of preparing the referendum. There are a number of steps required - some of which are identifying the eligible voters, the mandatory minimum 90-day official notice, providing educational opportunities for the eligible voters, and preparing the ballot. At this point, our timeline has not been set.

You are welcome to email any questions or requests for updates as we proceed.

We held our conference call with Idaho's State Social Security Administrator's (SSSA) staff and our Seattle Regional office yesterday.

As you know, the State of Idaho has enabling legislation which provides Social Security coverage for all firefighters. This legislation was created based on the request by firefighter representatives to join the Public Employee Retirement System of Idaho and participate in Social Security to replace the financially troubled Firefighter's Retirement Fund.

Absent a 218 Modification, the State has indicated their intention to correct the situation by using the legal options available to them, also known as an "error modification." This would include a referendum(vote) of the affected employees to ratify the State's decision and would apply to all tax years involved. In addition, the State has the choice to conduct this vote on a State-wide basis. Only firefighters who are members of PERSI and not covered by a 218 modification would be eligible to vote in the referendum. If the referendum does not pass, then Social Security coverage would cease. We (SSA) pointed out during the call that if Social Security coverage were to end, eligibility for Social Security disability benefits would no longer exist for most firefighters after 5 years of non-coverage. For currently retiredfirefighters, benefits may be reduced.

You will receive additional information from the SSSA's staff in the near future. In the meantime, if you have further questions, please contact Rita Foltman at rfoltman@sco.idaho.gov.